Editor’s View: How Fresh Produce SMEs Can Turn Financial Uncertainty Into Opportunity

Smaller growers, packers, importers and logistics firms may feel understandably twitchy reading the Bank of England’s latest Financial Stability Report. The Bank is clear that risks in the global system have risen – from frothy AI-driven markets to leveraged hedge funds and cyber threats.

But there is also good news buried in the detail: the UK banking system remains robust, capital rules are easing slightly, and specialist trade bodies such as the Fresh Produce Consortium (FPC) are actively shaping the policy environment on behalf of the sector.

The report, published on 2 December 2025, confirms that the UK’s largest lenders have comfortably passed their latest stress tests, with enough capital to keep lending even under a severe downturn.

The Financial Policy Committee has also decided to lower the benchmark Tier 1 capital requirement from around 14 per cent to around 13 per cent by 2027 – the first major relaxation since 2008 – to give banks more scope to support households and businesses.

At the same time, the Committee acknowledges that risks to financial stability have increased during 2025, citing elevated geopolitical tensions, high sovereign debt levels and stretched asset valuations, particularly in AI-related stocks.

For fresh produce SMEs, the message is nuanced but not bleak: the system is resilient, the door to finance is not shut, and the sector has a strong, vocal champion in the FPC working to keep trade flowing and costs down.

SME Finance: Challenges, But A System Built To Lend

The Bank’s own analysis confirms that lending to small and medium-sized enterprises has been weak since the global financial crisis, reflecting both a smaller share of SMEs seeking credit and structural barriers such as high screening costs on small loans.

However, the December report also says that UK banks are in strong financial shape, making healthy profits and holding far more safety capital than the rules require, even in tough times.

The decision to trim capital buffers is explicitly designed to ensure that “the banking system can continue to support households and businesses” in the face of evolving risks.

For smaller growers, packers and distributors, that creates an opportunity – if not a guarantee. Finance is still harder to access for SMEs than for large corporates, but a well-capitalised system under lighter capital constraints is, in principle, better placed to fund investment in cold-chain upgrades, automation, energy efficiency and sustainability projects.

The real test will be whether lenders translate the Bank’s confidence into practical appetite for lending to asset-rich but margin-thin businesses across the fresh produce chain. This is where strong sector representation becomes critical.

FPC’s Advocacy: Turning Risk Into Policy Wins

Against this backdrop, the Fresh Produce Consortium has spent the past two years leaning hard into its lobbying role – particularly around border policy, where costs and uncertainty have posed a direct threat to smaller businesses.

FPC represents around 700 members across the fresh fruit, vegetable, cut flower and plant supply chain, and that number is growing year on year, accounting for around 70 per cent of the UK’s fresh produce trade.

UK Parliament Committees

FPC's Chief Executive, Nigel Jenney, and Technical Director, Kelly Shields, have been a constant presence in Westminster evidence sessions, consultations and joint industry letters, pushing for workable solutions on the Border Target Operating Model (BTOM) and future Sanitary and Phytosanitary (SPS) arrangements with the EU.

That pressure has already delivered concrete results. After sustained lobbying, media engagement and direct dialogue with ministers, FPC helped secure a targeted exemption from full SPS checks on medium-risk EU fruit and vegetable imports until 31 January 2027 – a move widely reported as saving the sector around £200 million in additional costs.

FPC has also kept up the pressure over the broader BTOM regime, warning publicly that poorly designed border processes would drive up costs for businesses and hard-pressed consumers alike, and working with Defra and MPs to push for a more risk-based, efficient approach.

In other words: while the macro-risk picture may look more complicated, the sector is not a passive passenger. It has a trade body that has already proved its ability to shape outcomes.

Market Volatility: Real Risks, But Better Shock Absorbers

The Bank of England remains concerned about pockets of leverage and exuberance in global markets – notably the £100 billion of leveraged positions in gilt repo markets held by a relatively small number of hedge funds, and the debt-fuelled boom in AI-linked equities.

A sharp correction, the Bank warns, could send ripples through funding markets, tighten credit conditions and dent business confidence. That risk is real for fresh produce SMEs, which rely on affordable overdrafts and loans, and on stable demand from retailers and foodservice customers.

But there are two important balancing factors:

Banks are stress-tested for exactly these kinds of shocks

The latest exercises explicitly model steep asset-price falls, spikes in interest rates and severe global slowdowns. Even under these scenarios, the major UK lenders stayed above minimum capital thresholds.

Policy is moving towards more, not less, support for domestic food resilience

Across recent strategies and committee reports, government has repeatedly acknowledged the importance of domestic food production, supply-chain resilience and horticulture’s role in the UK economy – a narrative FPC and other bodies have pushed hard to embed.

For smaller produce operators, that combination – robust banks and a growing recognition of food security as a national priority – is far from a worst-case backdrop, even if the day-to-day feels tough.

Cyber Threats: A Risk The Sector Can Actually Control

One area where the Bank is particularly vocal is cyber risk and operational resilience. It warns that a “heightened threat landscape” and increasing dependence on digital infrastructure mean cyber incidents could have systemic implications if they hit key financial or payment systems.

For fresh produce SMEs, the risk is more immediate: ransomware or system outages that stop orders, disrupt warehouse management or knock out temperature controls. Recent attacks on logistics providers and retailers have shown how quickly fresh food can be lost when systems go down.

The silver lining is that, unlike global bond markets or AI bubbles, cyber resilience is something individual businesses can actively influence. Relatively modest investments in:

• Regular secure backups,

• Basic network segmentation,

• Staff awareness training,

• Multi-factor authentication,

• Clear incident-response plans.

All of these can dramatically reduce the impact of an attack. Government guidance and sector-specific support are improving, and there is growing recognition – again, pushed by trade bodies – that food and horticulture should be treated as critical national infrastructure.

A Sector With A Voice – And A Future

So where does this leave smaller UK fresh produce businesses as they scan the headlines about financial stability, hedge-fund leverage and AI bubbles?

Three points stand out:

The financial plumbing is in better shape than in previous crises

Banks are better capitalised, better supervised and explicitly expected to keep lending through shocks. Slightly lower capital requirements give them more room to do so.

The fresh produce industry is not shouting into the void

FPC has shown that determined lobbying can deliver real, bottom-line wins – from delaying costly SPS checks to influencing the direction of border and SPS policy more broadly. That advocacy will matter even more as the UK-EU SPS agreement takes shape and as domestic food policy evolves.

Some of the biggest risks are also levers for competitive advantage

Businesses that use this period to strengthen their finances, modernise systems and invest in cyber and operational resilience will be better placed not just to survive the next shock, but to win new business from customers looking for reliability.

The Bank of England may be sounding a sober note on global risks, but the story for UK fresh produce isn’t simply one of vulnerability. With a resilient banking system behind it, an increasingly food-security-focused policy debate, and an active trade body constantly engaging with ministers and officials, the sector has real agency.

For growers, packers, importers and logistics specialists, the challenge now is to lean into that – working with FPC and lenders, and investing in resilience where they can – so that when the next bout of financial turbulence hits, fresh produce SMEs are not just braced for impact, but positioned for the recovery that follows.

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